Time Warner to Spin Off AOL Division

Article Tools

Share This +

Wednesday, April 29, 2009

Time Warner Inc. announced this morning in a filing with the Securities and Exchange Commission that it intends to spin off its ailing AOL division.

"Although the Company's Board of Directors has not made any decision," the company wrote in its latest quarterly report to investors, "the Company currently anticipates that it would initiate a process to spin off one or more parts of the businesses of AOL to Time Warner's stockholders, in one or a series of transactions."

Time Warner's net income dropped 14 percent over the same period a year ago, mainly because of dropping revenues at AOL but also because of a suffering publishing business.

Tech industry analysts had, for years, speculated that Time Warner would spin off AOL; the two companies merged in 2001 with the idea that AOL's strengths as a new media company could benefit an old media company like Time Warner, and vice versa. But few synergies ever arose from the marriage. Even AOL founder Steve Case, who is no longer with the company, has said that he believes the two companies should be separated.

Talk of a split between the two companies was renewed in March when Time Warner ousted AOL's two top executives and placed former Google executive Tim Armstrong at the top of the company. In an all hands meeting with AOL staffers after he was named to the post, Armstrong exhorted the company to "get America back online" and said that AOL's Dulles office, the company's original headquarters, would be at the heart of a new wave of innovation.

Meanwhile, tech pundits have continued to speculate that Armstrong had been brought on board to spin off the company. Earlier this month, Time Warner proposed to debtholders a change in terms of more than $12 billion in loans. Under the proposed revision, filed with the SEC, Time Warner would guarantee AOL's debt with assets from its HBO division instead of AOL.

Tagged: AOL

Comments:

Note: LoudounExtra.com does not necessarily agree with comments posted below — responsibility lies with the relevant reader alone. Peruse our reader agreement and privacy policy

Time Warner - like a vampire - sucked the life out of a once unique and vibrant business and is not ready to kick the corpse to the curb...

Posted by GusInLeesburg (anonymous) on May 1, 2009 at 7:40 a.m. (Suggest removal)

AOL's business model was flawed from day one. When the internet was new, the average Joe assumed that AOL was the gateway to the internet. After people realized they could reach all their favorite websites without AOL and others began offering internet service, AOL had no power to maintain its customer base.

As such, AOL just became another niche player on the internet with millions of other providers and content distributors all courting the same customer base.

AOL might have better luck expanding into 3rd work countries with no history or culture of internet use. Maybe they can monopolize the citizen base overseas. But here in the US, AOL is a joke.

As for Time Warner, they should have never merged with AOL in the first place. Steve Case pulled the ultimate Houdini on the TWC shareholders.

Posted by AlbyVA (anonymous) on May 1, 2009 at 10:10 a.m. (Suggest removal)

Dont have an account? Sign up!